2009 (1) TMI 475 - HC - Companies Law

Amalgamation - Held that - Since the instant scheme does not affect rights of the members or the creditors of the transferee-company as it does not involve reorganisation of the share capital, the instant scheme is nothing but the amalgamation of the subsidiary company with the holding company for the convenience of business and efficient administration. Hence, the scheme of amalgamation as per annexure A is sanctioned so as to be binding on all the shareholders secured and unsecured creditors of the petitioner (transferor-company) and on the transferee-company. Company petition is, accordingly, allowed.

Issues Involved:
1. Sanction of the scheme of amalgamation.
2. Compliance with the provisions of sections 94 and 97 of the Companies Act, 1956.
3. Payment of registration fee and stamp duty.
4. Requirement of a separate petition by the transferee-company before the High Court at Delhi.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petitioner, M/s. Nokia Siemens Network India (P.) Ltd., sought the sanction of amalgamation with M/s. Nokia Siemens Networks (P.) Ltd. The proposed scheme of amalgamation was approved by the board of directors of the transferor-company on 29-2-2008. The scheme was intended to be beneficial for both companies, enabling pooling of resources, enhancing operational efficiencies, and resulting in more productive yields. The scheme did not involve any reorganization of shares, and no new shares would be allotted post-merger.

2. Compliance with Provisions of Sections 94 and 97 of the Companies Act, 1956:
The Registrar of Companies raised objections regarding the merger of the authorized capital of the transferor-company with that of the transferee-company, citing non-compliance with sections 94 and 97. The petitioner argued that the merger did not violate these sections, as the scheme of amalgamation sanctioned by the Court becomes operational by virtue of the Court's order, making separate compliance with sections 94 and 97 unnecessary. The Court agreed, stating that the necessary changes could be made by the Registrar after receiving the certified copy of the Court's order.

3. Payment of Registration Fee and Stamp Duty:
The Registrar of Companies contended that the merger would result in a substantial loss of revenue to the Central and State Governments due to the non-payment of registration fees and stamp duty. The petitioner countered that the requisite fee had already been paid by the transferor-company on its authorized share capital, and thus, no additional fee was required. The Court supported this view, referencing the case of Mphasis Ltd., In re, which held that there is no need to pay duty again on the same authorized capital. However, the Court noted that if the Division Bench reversed this decision, the petitioner would be liable to pay the requisite fees.

4. Requirement of a Separate Petition by the Transferee-Company:
The Registrar of Companies also objected that the transferee-company had not filed a separate petition before the High Court at Delhi. The petitioner argued that since the transferor-company was a wholly-owned subsidiary of the transferee-company, and no new shares were being issued, a separate petition was unnecessary. The Court agreed, citing several precedents where it was held that no separate petition is required if the scheme does not involve reorganization of share capital and is not detrimental to the interests of the members or creditors of the transferee-company.

Conclusion:
The Court sanctioned the scheme of amalgamation, making it binding on all shareholders, secured and unsecured creditors of both the transferor and transferee companies. The petitioner was directed to file a certified copy of the order with the Registrar of Companies within 30 days. The judgment emphasized that the scheme did not violate any legal provisions, was not contrary to public policy, and was beneficial for the stakeholders involved.

← Previous Next →